World Economy

Malaysia Expects Moderate Growth in 2018

Malaysia Expects Moderate Growth in 2018
Malaysia Expects Moderate Growth in 2018

Malaysia’s economy is expected to be on a moderate growth momentum next year with gross domestic product projected to grow at 5.5%, said Malaysian Industrial Development Finance Amanah Investment Bank Bhd chief economist,  Kamaruddin Mohammad Nor.

He said although the projection was slightly lower compared to this year’s forecast of 5.8%, it was still considered a respectable figure, adding that the moderation was due to the high base effect in 2017, Bernama reported.

“It’s going to be a moderate year, in line with the expectation of moderation in global growth. The World Trade Organization has projected world trade will be slightly lower next year, down to 3.2% from 3.6% this year, and this will be among the factors which will affect our economy,” he said at a media briefing on the market and economic outlook for 2018 in Kuala Lumpur Monday. However, Kamaruddin said, the MIDF expected to see a robust spending trend in China, the world’s second largest economy, especially by the manufacturers, and that would likely have a positive spillover effect to Malaysia.

“China’s officials had projected a 6.5% growth in trade for 2017, but it had averaged 6.8% for the first quarter of 2017. “We foresee that China’s GDP growth will be at 6.7% for 2018, so this bodes well for our domestic economy’s performance, as our trade with the republic accounts for between 16 and 17% of our total trade,” he said.

As for the ringgit, the chief economist said the increase, expected to be announced by the US Federal Reserve in 2018, would affect the ringgit-US dollar exchange rate. Kamaruddin said MIDF expected the local note to be traded at 3.95 against the greenback by end-2018, from 4.05 by end-2017.

He said MIDF also expected that Bank Negara Malaysia to raise the interest rate by 0.25 basis point to 3.25% from the current 3%.

Meanwhile, MIDF research department head, Mohd Reza Abdul Rahman, projected that the equity market would see a robust trading volume of small- and mid-capitalized stocks on Bursa Malaysia and that the FBMKLCI index would rebound to 1,900 next year.

“This year, the market recovery is rightly anticipated and liquidity is still at a favorable level with fund flow at circa RM10 billion. “We expect the earnings to rebound next year and the price to hover in tandem, especially on the banking sector, which currently has the higher weightage,” he said.

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